At the end of 2016, the European Commission put forward a proposal for a revised Renewable Energy Directive (REDII), which regulates the Guarantees of Origin system (GOs). ECOHZ has written about this in previous articles and we continue to follow developments in Brussels closely. The proposal is currently being debated by the European Parliament and the Council (where the EU Member States are represented). An important vote will take place in the European Parliament Committee at the end of November and Member States are expected to agree on a common position later this year. The entire process will not be concluded until 2018, however, as all three Institutions will need to agree on the text in three-way negotiations. This is likely to be complicated as there is disagreement concerning the overall ambition of the proposal and the level of renewable energy that the EU should be aiming for.
First and foremost, the REDII proposal includes positive signals to the GO market: the Commission wants the use of GOs to be mandatory for making renewable electricity claims and wants to expand the GO system to other key energy areas such as gas, heating and cooling.
However, the Commission’s proposal also contains a rather worrying provision, namely a proposal to introduce a mandatory system in which Member States should auction GOs originating from power plants receiving support. We believe that this would be detrimental for two reasons: firstly, it would disrupt a well-functioning system, and severely affect today’s market balance. It will likely contribute to commoditizing the GO market, thus reducing consumer value, and range of choice. Secondly, mandatory GO auctioning would break the link between the power plant and the end-user. This will potentially have a negative impact on corporate demand for renewables in Europe as a whole. Specifically it will make signing long-term power purchase agreements (PPAs) significantly less attractive for corporate buyers, as the GOs linked to the specific power plant will not be made available to the buyer within the PPA, but instead auctioned off to the market.
ECOHZ has already addressed the above issue in an Open letter with suggested changes to the European Parliament in May. Throughout the summer and autumn we have continued to engage with decision makers, including the Spanish Member of European Parliament, José Blanco Lopez, who is responsible for the Parliament’s opinion.
ECOHZ is also talking to officials at the European Commission and at the Council, as well as to other stakeholders, such as consumer organisations, in order to put our points across. At the end of September Tom Lindberg attended several such meetings in Brussels where he argued that the revised REDII Directive should provide a strengthened framework for the GO system and further reinforce its relevance.
He stressed that the GO system is a good example of European global leadership in energy market innovation, and something the EU should be proud of. ECOHZ is of the opinion that the system should be strengthened by building it further – enabling more countries, consumers, corporate buyers and power suppliers to use it – not by restricting its growth.
Together with other organisations, such as EKOenergy, AIB and RECs International, ECOHZ will continue to drive the message that a mandatory GO auctioning should be avoided and that Member States should be able to decide whether, or not they exclude, from the market GOs issued by power plants receiving support.
For those of you who want to encourage your own Members of the European Parliament to support our stance for a functioning GO market please find a link to our latest position paper.